Vat­i­can bank is fo­cus of money-laun­der­ing probe

The in­sti­tu­tion is sus­pected of fail­ing to dis­close the source of $30 mil­lion that was be­ing trans­ferred.

Los Angeles Times
- 2010-09-22
- The World
- Henry Chu re­port­ing from london Maria De Cristo­faro re­port­ing from rome henry.chu@latimes.com De Cristo­faro is a spe­cial cor­re­spon­dent.

In an­other blow to the Holy See, Ital­ian au­thor­i­ties have be­gun in­ves­ti­gat­ing the top two of­fi­cials at the Vat­i­can bank on sus­pi­cion of vi­o­lat­ing money-laun­der­ing rules and have frozen $30 mil­lion of the bank’s as­sets, news re­ports said Tues­day.

The Vat­i­can, al­ready bat­tered by a scan­dal over priestly sex­ual abuse, expressed “puz­zle­ment and amaze­ment” at the al­le­ga­tions and said it was com­mit­ted to fi­nan­cial trans­parency.

The two of­fi­cials un­der in­ves­ti­ga­tion were iden­ti­fied by news me­dia as Et­tore Gotti Tedeschi and Paolo Cipri­ani, the chair­man and di­rec­tor gen­eral, re­spec­tively, of the In­sti­tute for Re­li­gious Works, pop­u­larly known as the Vat­i­can bank. It is re­spon­si­ble for man­ag­ing the Holy See’s funds, the pen­sion sys­tem of its em­ploy­ees and as­sets ear­marked for char­ity.

The bank, a pri­vate en­tity, is sus­pected of fail­ing to iden­tify the source of $30 mil­lion that it was trans­fer­ring to a branch of Amer­i­can fi­nan­cial gi­ant J.P. Mor­gan in Frank­furt, Ger­many, and to the Ital­ian in­sti­tu­tion Banca del Fu­cino, ac­cord­ing to Italy’s ANSA news agency.

Ital­ian law re­quires that the iden­tity of ac­count hold­ers be made read­ily avail­able to fi­nan­cial reg­u­la­tors. Mag­is­trates in Rome ini­ti­ated the in­ves­ti­ga­tion of the Vat­i­can bank out of con­cern that it failed to ad­here to these rules, ANSA re­ported.

Au­thor­i­ties then froze $30 mil­lion in the bank’s funds as a pre­cau­tion­ary mea­sure.

The Vat­i­can said it was sur­prised by the in­ves­ti­ga­tion be­cause its bank had been in dis­cus­sions with global fi­nan­cial bod­ies on how to join the world­wide “white list” of in­sti­tu­tions that con­form to clean bank­ing stan­dards.

“The au­thor­i­ties of the Holy See have long been known for the good­will they have shown in the trans­parency of fi­nan­cial op­er­a­tions of the In­sti­tute for Re­li­gious Works,” the Vat­i­can said in a state­ment, adding that it main­tained “ut­most con­fi­dence” in Gotti Tedeschi and Cipri­ani.

Italy’s RAI tele­vi­sion net­work quoted Gotti Tedeschi as say­ing he was “hu­mil­i­ated and mor­ti­fied” by the in­ves­ti­ga­tion.

The banker, who has headed the Vat­i­can’s fi­nan­cial arm since last year, is known to be a mem­ber of the con­ser­va­tive re­li­gious group Opus Dei and is an out­spo­ken ad­vo­cate of eth­i­cal fi­nanc­ing.

News of the in­ves­ti­ga­tion comes as the Vat­i­can tries to tout the suc­cess of a just­com­pleted four-day visit by Pope Bene­dict XVI to Bri­tain and as it grap­ples with an abuse scan­dal that con­tin­ues to pro­duce more al­le­ga­tions of sex­ual mo­lesta­tion by priests.

This is not the first time that the Vat­i­can’s bank and its vo­lu­mi­nous fi­nances

have been em­broiled in con­tro­versy.

In the 1980s, the bank made head­lines over its in­volve­ment in one of Italy’s biggest fraud cases, the col­lapse of Mi­lan’s Banco Am­brosiano, which lent more than $1 bil­lion to com­pa­nies in Cen­tral Amer­ica that ex­isted mostly on paper. The Vat­i­can bank had backed the loans with letters of credit.

The head of Banco Am­brosiano, Roberto Calvi, who was known as “God’s banker” be­cause of his ties to the Vat­i­can, fled to Eng­land and was found hang­ing from a bridge in London in 1982.

The Vat­i­can bank in­sisted that it had done noth­ing wrong, but agreed to pay $250 mil­lion to Am­brosiano’s cred­i­tors.

The then-pres­i­dent of the Vat­i­can bank, Amer­i­can Arch­bishop Paul Marcinkus, was charged as an ac­ces­sory in the bank­ruptcy scan­dal but was never pros­e­cuted. He died four years ago.

An­gelo Carconi

HOLY SEE: Po­lice of­fi­cers are on duty in front of St. Peter’s Square. The Vat­i­can expressed “puz­zle­ment and amaze­ment” at the al­le­ga­tions about its bank and the “ut­most con­fi­dence” in the fa­cil­ity’s top two ex­ec­u­tives.